First-time homebuyers in Guelph

For many first-time homebuyers, getting a mortgage can be a lot more complicated than they expected. While you may be budgeting for a certain mortgage payment, there may be some hidden fees that you’re not aware of.

Mortgage Insurance

Not everyone needs mortgage insurance, but it’s mandatory for certain homebuyers. If you have a downpayment between 5% and 19.99%, you’re required to buy mortgage default insurance. This insurance protects the mortgage lender, in case you’re unable to continue making your mortgage payments for whatever reason. This is also known as default insurance. Typically, mortgage insurance can cost you between 2.8% to 4% of the cost of your mortgage, but it helps to lower mortgage rates so more Canadians can afford mortgages.

There are a couple of requirements for qualifying for mortgage insurance:

Maximum amortization of 25 years

Purchase price of $500,000 to $999,999 requires a higher down payment

Your purchase price must not be higher than $1,000,000; these houses require a 20% downpayment

Reimbursements

Sometimes when you buy a home, you have to reimburse the current homeowner for any costs they’ve paid for in advance. This can include property taxes, utilities and more, so you’ll have to make sure any amounts that have been pre-paid are reimbursed by you.

Title Insurance

Most mortgage lenders require you to purchase title insurance. This is often a one-time cost that will protect your title to the property and ensure that you’re legally identified as the owner of your property. It covers you for potential losses like fraud, survey errors, encroachment issues, existing liens or anything else that may get in the way of your ownership of the property.

Ontario Land Transfer Tax

Whenever you buy land in Ontario, you’ll have to pay land transfer tax to the provincial government. Land transfer taxes are calculated based on the purchase price of your property. Each province sets its own land transfer tax rates, and there are also special rules when buying real estate in Toronto and Montreal. However, the great news for first-time homebuyers is that you might be eligible for a full or partial refund of the land transfer tax. The government recently raised the credit from $2,000 to $4,000 for first-time homebuyers.

When you’re in the process of finalizing your home purchase, there are a few other fees you may encounter, including appraisal fees and legal fees. Each situation is unique, so talk to your mortgage agent to find out what you can expect to pay.

If you have questions about mortgages or you’re ready to get a mortgage for your new, contact Suzanne Hagan in Guelph! I’d be happy to help you every step of the way.